Taxes on tenants becoming election issue
September 29, 2006

City council has agreed to consider the idea of a tax rebate for low income tenants. The moves comes as tenant groups are trying to make tax fairness an issue in the upcoming city elections.

Brian McHattie suggested the tax rebate idea to council this week. He noted that “tenant households as a group earn half of the average yearly income of homeowners ($29,000 versus $57,000) and yet contribute a far greater percentage of their total income …through property taxes”.

McHattie suggested the city's tax rebate for seniors could be a model for a similar program serving tenants with poverty level incomes including those on social assistance. The senior's program offers up to $150 rebate to help low income seniors pay their property taxes, but doesn't apply to people living in apartments.

City tax rates on multi-residential buildings are nearly three times higher than those on single-family homes. As a result it is estimated that about 20 percent of rent payments go to municipal taxes. Since the taxes are paid by the landlords, and tenants don't get tax bills, many tenants are not aware of how much they are paying.

The excessive rates are an historical hangover from the period when tenants were not permitted to vote in municipal elections, and have survived partly because voter turnout from apartments remains very low. Tenant advocates in Hamilton are trying to change that.

They've organized a media conference for Monday morning “to launch a major information and lobby effort to profile the concerns of tenants during the municipal election”. A statement from the Solutions for Housing Action Committee (SHAC) and the Governor's Green Tenants' Association points out that tenants make up nearly a third of the city's voters and describes the Hamilton's tax rates as “an unfair financial burden on seniors, low income families and new immigrants.” 

In the late 1990s the provincial government called on cities to equalize tax rates on all residences, and to reduce commercial and industrial tax rates to a similar level. To enforce the directive, the province banned cities from raising taxes on any class of property where the rate in that municipality exceeded the provincial average.

Hamilton council responded with a business tax reduction plan that has cut $40 million a year from commercial and industrial properties, but took no action on the excessive tax rates on apartments. Tenants got some relief from the ban on raising their taxes, so the ratio with homeowners has fallen over the last five years. But apartments are still charged a rate of 4.16% compared with the 1.54% imposed on single family homes.

A city housing study found that over 14,000 Hamilton households use more than half their income for rent putting them at extreme risk of homelessness. Using more than 30 percent of one's income for housing is considered excessive by many experts.

McHattie's proposal to study the tax rebate idea was seconded by Terry Whitehead, but ran into concerns from Phil Bruckler and Tom Jackson who wanted assurances that the initiative was just up for exploration.

Jackson said it was “a noble cause” but wanted it made clear that there would be “a full airing and debate in the new year.” He expressed concern that the proposal wouldn't apply to homeowners, “because I've got some widows, some widowers and I've got some working families who have a very, very, very modest little bungalow and they're hanging on.”

Bruckler called the motion “admirable” but wanted some wording changed that he felt “presupposes the outcome of [the staff] review”. He pointed to part three of the motion that said the program would “remain in place until such time as the multi-residential tax rate has fallen to a ratio with residential homes of 1:1”. McHattie agreed to add the word “may” in front of the phrase, and the motion to explore the idea was approved.

A transcript of the council discussion, including the full text of the motion, is on the CATCH website. Monday's media conference is taking place at 10 am in Governor's Green Apartment Building, 101 Governor's Road in Dundas.